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Advanced Accounting: Computer Lab - Practical Question Bank Faculty of Commerce, Osmania University
Advanced Accounting: Computer Lab - Practical Question Bank Faculty of Commerce, Osmania University
1. Venkat Ltd made an issue of 10,000 equity shares of Rs.100 each, payable Rs.20 on
application, Rs.30 on allotment, Rs.30 on First call and Rs.20 on final Call. All the
shares are subscribed and amounts duly received.
Pass journal entries to give effect to these and also show the relevant items in the
Balance Sheet.
2. Raju Ltd was floated with an authorized capital consisting of Rs. 20,000, 9%
preference shares of Rs.100 each, payable Rs.25 per share on application, Rs.25 per
share on allotment and Rs.50 per share on first and final call and Rs.3,00,000 equity
shares of Rs.10 each, payable Rs.2 per share on application, Rs.3 per share on
allotment and Rs.5 per share first and final calls. All the money received.
Make the necessary entries in Journal and the Balance sheet of the company.
3. Rao & Company Ltd issued 5000 equity shares of Rs.100 each at a premium of Rs.40
per share, payable Rs.10 per share on application, Rs.60 per share on allotment
(including premium), Rs.30 on first call and balance on final call. The shares were all
subscribed and all money due was received expect the first call money on 1000 shares
and final call money on 1500 shares.
Give the Journal Entries to record the above transactions.
4. Varun Ltd. invited application for 1,00,000 shares of Rs.100 each at a discount of 6%
payable as follows:
On application Rs.25, on allotment Rs.34 and on first and final call 35.
The applications received were for 90,000 shares and all of these were accepted. All
money due was received except the first and final call on 1,000 shares.
Pass necessary entries in journal of the company also show how these transactions
would appear in Balance sheet of the company.
5. Lavanya Ltd. Offered 1,00,000 equity shares of the nominal value 100 each for public
subscription at Rs.120. The amounts payable on the shares were on application Rs.45,
on allotment (including premium) Rs.45, on first and final call Rs.30. The actual
subscription was only for 90,000 shares. All money payable by shareholders was
received except from Kirshna Rao, who had taken 1000 shares but failed to pay the
final call. His shares were forfeited and re-issued to Prashanth at Rs.60 each.
Show journal entries in the books of the company.
6. The Sudhakar Ltd. purchases assets of Rs.3,50,000 and took over the liabilities of
Rs.30,000, it agreed to pay the purchase price, Rs.3,30,000 by issuing debentures of
Rs.100 each at a premium of 10%.
Give journal entries in the books of Sudhakar Ltd..
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7. On July 1, 1997 Motor Ltd., issued 10,000 6% Debentures of Rs.10 each at 95%,
repayable on June 30, 2007 at par. Rs.6 per debenture was payable on application and
the balance on allotment. Interest was payable on the full nominal amount as from
September 1, 1997.
Applications were received for 15,000 debentures. All allotments were made
proportionately, over subscriptions being applied to the balance due on allotment,
which took place on August 31, 1997. All sums due on allotment were received by
September 14, 1997.
Assuming that the discount is to be written off evenly over the whole period, you are
required to draft journal entries to record (a) the issue of debentures, and (b) The
charges to the Profit and Loss Account for the year ended June 30, 1998.
8. Ramu Ltd., issued 10,000 Debentures of Rs.100 each for subscription. The debenture
moneys are payable as follows:
Rs.30 on application, Rs.40 on allotment, Rs.20 on first call and Rs.10 on second call.
A person who holds 200 Debentures fails to pay the amount due at the time of
allotment. He, however, pays this amount with the first call money. Another person
who is holding 400 Debentures, has paid all the calls in advance at the time of
allotment.
Give Journal entries in the books of the company.
9. The Radha Ltd. purchases assets Rs.3,60,000 and took over the liabilities of
Rs.35,000. It agreed to pay the purchase price, Rs.3,34,950 by issuing debentures of
Rs.100 each at a premium of 10% and Rs.65 by cash. The debentures of the same
company are quoted in the market at Rs.130.
Give journal entries in the books of Radha Ltd..
10. The Ashoka Ltd. purchases assets Rs.3,80,000 and took over the liabilities of
Rs.30,000 at an agreed value of Rs.3,33,000. The company issued debentures at 10%
discount in full satisfaction of the purchase price.
Give journal entries in the books of Ashoka Ltd..
11. Journalize the following transactions at the time of issue and redemption of
debentures: in the books of Venkat Ltd.
a) A debenture issued at Rs.95, repayable at Rs.100
b) A debenture issued at Rs.95, repayable at Rs.105
c) A debenture issued at Rs.100, repayable at Rs.105
d) A debenture issued at Rs.105, repayable at Rs.100
Note: The Face value of each debenture is Rs.100
12. Krishna Ltd. on 31st December, 1996 redeemed Rs.10,000 6% debentures out of
capital by drawing a lot. Similarly, the company on 31st December, 1997 redeemed
Rs.15,000 6% debentures out of profits by drawing a lot.
You are required to pass journal entries in the books of the company.
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The public applied for 3,00,000 shares, these were allotted. All the money due on
allotment and call was received accept the first call on 10,000 shares and final call on
15,000 shares.
Pass general entries and prepare opening balance sheet.
14. Reddy Limited issued 5,000 equity shares of Rs.10/- at a premium of Rs.2 per share,
payable Rs.2 on application, Rs.5 on allotment (including premium), Rs.3 on first call
and balance on final call. The share were all subscribed and amount received on calls
except the first call on 1,000 shares and final call 1,500 shares.
Give cash book, general entries for the above transactions and also prepare its opening
balance sheet.
15. Y Company Ltd. issued at par Rs.60,00,000 (7%) debentures in bonds of Rs.1,000
each, payable 20% on application, 20% on allotment, 30% on first call and balance
one month thereafter. Except the allotment money on 400 bonds and call money on
600 bonds which were in arrears, all the money was duly received.
Make the cash book and journal entries; and show ledger accounts.
16. On 1st April, 1993, Geeta Products Ltd. issued Debenture for Rs.1,00,000, redeemable
at par at the end of the 5 years and its was resolved that a Sinking Fund should be
formed and invested in tax-free securities.
Give Journal Entries for 5 years, assuming that the interest received on the investment
was at the rate of 5 percent on cost, that the interest was received yearly and
immediately invested and that the investments were realized at a loss of Rs.300 at the
end of five years.
Reference to the Sinking Funds Table shows that Rs.0.180975 invested at the end of
the year, at 5% compound interest will produce Rs.1 at the end of 5 years.
17. The following is the Balance Sheet on 31st March 1992 of Mr. A.
He decided to admit a partner and it is arranged that the partner shall join on the
above Balance Sheet subject to the following modifications:
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18. The Balance sheet of MN is given as follows:
Particulars Rs. Particulars Rs.
M Capital a/c 30,000 Cash 10,000
N Capital a/c 20,000 Debtors 20,000
Bank Loan 10,000 Furniture 10,000
Sundry Creditors 20,000 Machinery 40,000
80,000 80,000
The partners want to dissolve the firm.
Machinery realized only 50% of the book value. There are bad debts to the extent of
Rs.5,000.
Pass the Journal entries and prepare realization and capital accounts of M and N.
19. A & B shared in proportions of 3 and 2 with capitals of Rs.20,000 and Rs.15,000
respectively. They agree to admit C into partnership as from 1st January, 1992 on the
following terms for a third share in future profits:
a) That C should bring in Rs.20,000
b) That as C is unable to bring this share of goodwill in cash, the goodwill of the
firm be valued at Rs.15,000 and a goodwill account be raised and written off in
the firm’s books.
Set out the journal entries required, the capital accounts of the partners, the goodwill
account and state the future profit sharing proportion of the partners.
20. A and B are partners sharing profits in the ratio of 3 : 2. C is admitted and the new
profit sharing ratio is 2 : 2 : 1. C brings in cash Rs.8,000 for capital and Rs.2,000 for
goodwill. The balance sheet of A and B is as follows:
Rs. Rs.
Capitals: A 8,000 Good will 2,500
B 8,000 Assets 17,500
Reserve Fund 4,000 . .
20,000 20,000
Give journal entries and prepare balance sheet of the new firm.
21. A and B are equal partners in a firm. They decided to admit C as a new partner and
Re-adjust the Balance Sheet values for this purpose. The Balance Sheet of A and B on
31st Dec., 1989 was as under:
Rs. Rs.
Creditors 1,000 Cash 600
Bills Payable 1,000 Debtors 1,500
Reserve Fund 400 Stock 1,400
A’s Capital 1,500 Furniture 400
B’s Capital 1,000 Machinery 1,000
4,900 4,900
The following adjustments were to be made before C’s admission:
(a) Rs.300 were to be provided for doubtful debts, (b) furniture was valued Rs.250, c)
investment worth Rs.400 (not mentioned in the Balance Sheet) were to be taken into
account d) C brings Rs.1,000 for capital and Rs.1000 for goodwill which sum A and
B withdrew in their proportion.
Give i) Journal Entries, ii) Revaluation Account, and iii) Balance Sheet of the new
Firm.
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22. A & B are Partners in a firm sharing profits and losses as 5 : 3. The position of the
firm as on 31st March, 1992 was as follows:
Rs. Rs.
Capital Accounts: Plant and Machinery 40,000
A 30,000 Stock 30,000
B 20,000 50,000 Sundry Debtors 20,000
Sundry Creditors 15,000 Bills receivable 10,000
Bank Overdraft 42,500 Cash at Bank 7,500
4,900 4,900
C now joins them on condition that he will share ¾th of the future profits, the balance
of profits being shared by A and B as 5 : 3. He introduces Rs. 40,000 by way of
capital and further Rs. 4,000 by way of premium for goodwill. He also provides loans
to the firm to pay off bank overdraft. A and B to depreciate Plant by 10% and to raise
a premium for Doubtful Debts against sundry debtors @5%.
You are asked to journalize the entries in the books of the firm and show the resultant
Balance sheet.
23. The following is the balance sheet of A and B as at 31st December, 1989.
Rs. Rs.
Creditors 20,000 Cash at Bank 10,000
Capital: Sundry Assets 20,000
A 25,000
B 20,000 .
65,000 65,000
The Partners shared profits and losses in the ratio of 3 : 2. On the above date C was
admitted as a Partner on the condition that he would pay Rs.20,000 as capital.
Goodwill was to be valued at 3 year’s purchase of the average of four year’s profits
which were:
1986 Rs. 9,000 1988 Rs. 12,000
1987 Rs. 14,000 1989 Rs. 13,000
The new profit sharing ratio is 7 : 5 : 4.
Give journal entries, ledger accounts and Balance Sheets if goodwill is raised and
written off.
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a) Shiva would bring Rs.10,000 as his Capital, and pay Rs.8,000 as premium
for one-fifth share in the business.
b) The assets should be revalued as follows:
Stock less 10 percent investments at Rs.10,000, furniture, motor lorry, plant and
machinery less 5% and Land and – Buildings at Rs.15,000.
c) A provision for doubtful debts to be created at 5% of sundry debtors.
Assuming that the above agreement was duly carried out, show the necessary journal
entries to record the above adjustment and prepare the balance sheet of the firm after
the admission of Shiva.
25. A, B and C are partners sharing profit and losses in the ratio of 3 : 2 : 1. C retires from
the firm and A and B decide to continue the business of the firm and share profits and
losses in the ratio of 5 : 3. Goodwill of the firm is valued at Rs.12,000.
If goodwill is raised at full value and its value is written back to the capital accounts
of the continuing partners.
Write the necessary journal entries and ledger accounts.
26. A, B and C are three partners sharing profit and losses in the ratio of 4 : 3 :2. B retires
and the goodwill of the firm is valued at Rs.5400. No goodwill appears as yet in the
books of the firm. A and C decide to share profits in the future in ratio of 5 : 3 and that
no goodwill account will be raised in the books of the firm.
Pass Journal entries.
27. A, B and C are equal partners. B retires, his share of goodwill is Rs.9,000. The
remaining partners have decided to continue the business sharing profit in the ratio of 3
: 2. Goodwill is not to be shown in the Balance Sheet.
Pass Journal Entries.
28. A and B are partners in a business sharing profits and losses as A 3/5ths and B 2/5ths.
Their Balance Sheet as on 1st January 1991 is given below:
Capital: A 20,000 Machinery 19,500
B 15,000 35,000 Stock 16,000
Reserve 15,000 Debtors 15,000
Sundry Creditors 7,500 Cash at Bank 6,000
Cash in hand 1,000
. .
57,500 57,500
B decides to retire from the business owing to illness and A takes it over and the
following revolutions are made:
a) Goodwill of the firm is valued at Rs.15,000.
b) Depreciate Machinery by 7.5% and stock by 15%
c) A Bad Debts provision is raised against Debtors at 5% and a Discount Reserve
against Creditors at 2.5%.
Journalize the above transactions in the books of the firm, prepare ledger accounts and
the Balance Sheet of A.
29. Basu and Das are Partners sharing profits and losses equally. On 30th June 1990 their
Balance Sheet was as under:
Rs. Rs.
Sundry Creditors 39,800 Freehold: Premises 26,000
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Capitals: Machinery 42,000
Basu 45,000 Stock 12,000
Das 36,000 Sundry Debtors 38,000
. Bank Balance 2,800
1,20,800 1,20,800
It is agreed that Basu will retire as from 30th June 1990 and that Das will take over the
business on the following terms:
a) Goodwill of the firm to be valued at Rs.11,000.
b) Stock to be agreed as worth Rs.10,000.
c) A Provision for doubtful debts to be carried at 2 percent.
d) Basu to be paid out as to Rs.20,000 of the amount found to be due to him
by a loan taken at 9 percent and as to the balance by a bill of exchange
payable after 12 months.
Show journal entries to record the above transactions and also the Balance Sheet of
Das after the adjustments have been made.
30. A, B and C were carrying on business in partnership, sharing profits and losses in the
ratio of 3 : 2 : 1 respectively. On 31 st December, 1990 Balance Sheet of the firm stood
as follows:
Liabilities Rs. Assets Rs.
Sundry Creditors 13,590 Cash 5,900
Capital Accounts: Debtors 8,000
A 15,000 Stock 11,690
B 10,000 Buildings 23,000
C 10,000 35,000
48,590 48,590
B retired on the above mentioned data and the following terms:
i) Buildings be appreciated by Rs.7,000, ii) Provision for bad debts be made @5% on
Debtors. iii) Goodwill of the firm be valued, at Rs.9,000 and adjustment in this
respect be made without raising Goodwill Account, iv) Rs.5,000 be paid to B
immediately and the balance due to him be treated as a loan carrying interest @6%.
Per annum. A and C decided to share-profits. In the ratio of 2 : 1.
Pass Journal entries to record the above mentioned transactions, and the balance sheet
of the firm as it would appear immediately after B’s retirement.
.
31. Kishore and Nakul are partners sharing profits and losses equally. Their Balance sheet
on 30th November, 1990 is as follows:
Liabilities Rs. Assets Rs.
Creditors 11,200 Cash 3,500
Bills Payable 1,800 Stock 17,800
Kishore’s Loan 5,000 Debtors 13,800
Reserve Fund 6,000 Less: Provision 1,400 12,400
Capital Accounts: Furniture 2,800
Kishore 15,000 Plant and Machinery 22,500
Nakul 20,000 35,000
59,000 59,000
They decide to dissolve the firm. The assets realized as follows:
Stock 18,200
Debtors 10,600
Furniture 1,800
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Plant and Machinery 19,000
Credit allowed a discount of 2% and expenses of realization amounted to Rs.554.
Give journal entries and the necessary ledger accounts to close the books of the firm.
32. The Balance Sheet of A, B and C sharing profits and losses as 3 : 2 : 1 respectively
stood as follows on 30th June, 1990 (figures are in Rs.):
Creditors 50,400 Cash at Bank 3,700
Joint Life Policy Reserve 10,000 Stock 20,100
Reserve Fund 12,000 Debtors 62,600
Capital Accounts: Investments 16,000
A 30,000 Furniture 6,500
B 20,000 Buildings 23,500
C 10,000 60,000 .
1,32,400 1,32,400
The firm was dissolved as on that date. For the purpose of dissolution, the
investments were valued at Rs.18,000 and stock at Rs.17,500. A agreed to take over
the investments and B to takeover the stock. C took over the furniture at book value.
Debtors and Building realized Rs.57,000 and Rs.25,000 respectively. Expenses of
realization amounted to Rs.450. in addition one bill for Rs.500 under discount was
dishonored and had to be taken up by the firm.
Give journal entries and the necessary ledger accounts to close the books of the firm.
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3) Interest on capital 5%.
4) B salary Rs.1,800 payable.
5) Closing Stock 12,500.
Prepare final accounts the firm.
34. (Debtors methods): A head office in Bombay has a branch in Hyderabad to which
goods are invoiced by the Head office at cost plus 25%. All cash received by the Head
office. From the following particulars show how the Branch Account will appear in
the Head office books:
Stock on 1st January, 2005 (at Invoice Price) 1,25,000
st
Debtors on 1 January, 2005 1,20,000
Goods invoiced from Head office 4,00,000
Remittances by Branch to Head office
Cash sales 1,60,000
Cash received from debtors 2,95,000 4,55,000
Goods returned to head office (at invoice price) 25,000
Cheques remitted to Branch:
Salaries 1,10,000
Rent & Taxes 30,000
Sundry expenses 5,000 1,45,000
Stock on 31st December, 2005 1,50,000
st
Debtors on 31 December, 2005 2,25,000
35. (Stock and Debtors method) Praveen Ltd. Has a branch at Pune. Goods were invoiced
at selling price which was fixed by adding 25% to the cost. From the following
information relating to the year 2005 ascertain the profit or loss made in the year 2005
by Stock and Debtors system:
Rs. Rs.
Stock at invoice Cash Sales 90,000
price on 1-1-2005 20,000 Credit sales 1,85,000
Goods sent to Branch Cash remitted to Branch
during the year 2005 for expenses:
at invoice price 3,00,000 Rent 2,400
Discount allowed to Salaries 5,600
customers 5,000 General Expenses 2,000 10,000
Cash received from Goods returned
customers 1,40,000 by Customers 6,000
Stock at invoice price on Debtors on 1-1-2005 10,000
31.12.2005 50,000
There was shortage of Rs.1,000 when Branch stock was physically verified.
36. (Admission): Azib and Omar are partners sharing profits in the ratio of 2 :1. Their
Balance Sheet on 1st April 2009 is as under:
Liabilities Rs. Assets Rs.
Creditors 2,50,000 Cash at Bank 1,50,000
General Reserve 1,50,000 Stock & Debtors 1,50,000
Capitals: Furniture 1,00,000
Azib 4,00,000 Land and Building 6,00,000
Omar 2,00,000 .
10,00,000 10,00,000
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They admit Sohail as partner giving him ¼ share. Sohail brings in Rs.2,00,000 as his
capital. Goodwill is valued at Rs.1,50,000 and will remain in the books. Land and
buildings are to be appreciated by 25% and Furniture is to be written down by
Rs.20,000. A provision of Rs.10,000 is to be made for outstanding expenses. Record
the transactions in any accounting software and generate the Balance Sheet after the
process of admission is complete.
37. On 1st April, 2009 Preksha Ltd. Offered 2,00,000 equity shares of Rs.10 each to the
public at a premium of Rs.2 per. The Payment was to be made as follows:
On application: Rs.5, on Allotment Rs.4 (including premium) and balance on call.
On April 2009, when the issue was closed, the company received applications totaling
3,50,000 shares, of which applications for Rs.50,000 shares were rejected by their
banker, SBI, on technical grounds of the valid 3,00,000applications, retail investors
applying for 1,00,000 shares received allotment in full, while the balance 1,00,000
shares were allotted to institutional investors in the rate of 1 : 2. The allotment process
was completed on 15th May 2009 and the directors made the call exactly a month later
in 15th June, 2009. One shareholder, Mr.Nikhil, holding 5000 shares, did not pay the
call money. After the notice, on 4th September 2009, these shares were forfeited and
re-issued to Mr. Sandeep at Rs.6 per share.
Pass necessary entries to reflect the above transactions of Preksha Ltd.
38. Mamta Ltd. Issues 25,000 6% Debentures of Rs.100 each on 1 st January 2005,
payable at a discount of 5% but repayable at the end of 4 years at a premium of 5%. A
sinking fund will be instituted for the purpose investments are expected to earn 4%
net. Sinking Fund tables show that an annual installment of Rs.0.23549 every year at
4% interest will taken Re.1 at the end of 4 years. Investments are made in nearest
multiples of Rs.1,000.
On 31st December 2008, the investments realized Rs.18,58,000. The bank balance as
on that date was Rs.8,35,000. The Debentures were paid off is full.
Show how the above transactions.
39. Manaank Ltd. Issued 10 Lakh equity shares of Rs.10 each. The whole issue was
underwritten by three booking firms, namely Merry Line (ML), Layman Bros (LB)
and More gun chase (MC) as under:
ML: 40%, LB: 30%, Mc: 30%
8 Lakh applications were received, of which 2 Laksh applications had the stamp of
ML, 1Lakh had to stamp of LB and another 2 Lakhs had the stamp of MC, It was
decided to adjust the unmarked applications in the ratio of Gross Liability after
deducting the marked applications. A commission of 2% is payable to the Brokers.
Show the calculation of Net Liability and record the Transactions is appropriate
books.
40. A Trading Firm has a Retail Branch, which is supplied with goods from the Head
Office and which keeps its own sales ledger and remits all cash received daily to the
Head Office, the Branch expenses being paid by the Head Office by weekly cheques.
From the following particulars draw up the Branch Account as they would appear in
the Head Office Books for the six months ending 31st December 2008:
Rs.
Six Month’s Credit Sales 2,485
Cash Sales 1,460
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Returns Inward 30
Cash Received on Ledger Accounts 2,387
Debtors on 1.7.2008 1,345
Stock on 1.7.2008 840
Stock on 31.12.2008 1,280
Goods received from Head Office 2,276
Bad Debts at the Branch 65
Wages and Sundry Expenses 415
Rent, Rates and Taxes 402
41. From the following particulars, prepare Branch Account showing profit or loss of the
Branch:
Opening Stock at the Branch :Rs.30,000
Goods sent to Branch :Rs.90,000
Sales (Cash) :Rs.1,20,000
Salaries :Rs.10,000
Other Expenses :Rs.4,000
Closing Stock could not be ascertained but it is known that the Branch usually sells at
cost plus 20%. The Branch Manager is entitled to a commission of 5% on the profit of
the Branch before charging such commission.
42. Sumana Limited invoices goods to their various Branches at cost and the Branches
sell for cash as well as on credit. From the following particulars, prepare the Branch
Stock Account, Branch Debtors Account, Goods Sent to Branch Account, Branch
Cash Account, Branch Expenses Account and Branch Profit and Loss Account in the
Books of Head Office:
Particulars Rs.
st
Stock on 1 January 10,000
Stock on 31st December 8,000
st
Debtors on 1 January 14,000
Debtors on 31st December 15,000
st
Cash on 1 January 400
Goods sent to Branch 30,000
Goods returned by Branch 2,000
Cash sales 30,000
Credit sales 25,000
Allowance to customers 400
Bad Debts 600
Returns from customers 1,000
Remittance by Branch 46,000
Wages and Salaries 4,000
Rent and Taxes 2,000
Normal Loss of goods due to wastage 500
Abnormal Loss due to pilferage 1,500
Cash remitted to Branch 4,500
43. Dynamic Ltd. issued 10,000 shares of Rs.10 each at a discount of Rs.1 per share. The
other details are as follows:
On Application Rs.2, On Allotment Rs.2, On First and Final Call Rs.5. Discount is to
be adjusted on allotment. All the money is received except from Mr. Ravi, who had
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been allotted 100 shares, failed to pay the first and final call amount and his shares
have been forfeited.
Journalize the above transactions relating to the forfeiture of the shares.
44. X and Y were partners in a firm sharing profits in the ratio of 3:2. On 1.1.2001 their
fixed capitals were Rs.3,00,000 and Rs.2,50,000 respectively. On 1.7.2001 they
decided that their total capital (fixed) should be Rs.6,00,000 in their profit sharing
ratio. Accordingly, they introduced extra or withdrew excess capital. The partnership
deed provided for the following:
(i) Interest on Capital @12% p.a.
(ii) Interest on Drawings @18% p.a.
(iii) A monthly salary of Rs.2,000 to X and a monthly salary of Rs.1,500 to Y. The
drawings of X and Y during the year was as follows:
Year 2001 X (Rs.) Y (Rs.)
June 30 20,000 15,000
September 30 20,000 25,000
During the year ended 31.12.2001 the firm earned a net profit of Rs.1,50,000. 10% of
this profit was to be transferred to general reserve.
You are required to prepare: (i) Profit and Loss Appropriation Account (ii) Partner’s
Capital Accounts and (iii) Partner’s Current Accounts.
45. X and Y are partners sharing profits and losses equally. It has been agreed that if a
partner retires, the other partner, should be desired to carry on the business, shall pay
to the retiring partner his share by four equal half-yearly installments adding interest
@5% p.a. with half-yearly rests. Goodwill is to be valued on the basis of five year’s
capitalization of the average annual super profits of three preceding financial years,
fixed assets being revalued for the purpose. The balance sheet of the firm as at
31.12.2002 was as follows:
Liabilities Rs. Assets Rs.
Creditors 9,160 Cash in Hand 13,000
X’s Capital Account 22,420 Book-debts 10,200
Y’s Capital Account 16,650 Stock 5,730
Building 19,300
48,230 48,230
Y retires on 1.1.2003 and X decides to carry on the business. The profits for the three
years ended 31st December were Rs.13,500; Rs.14,500 and Rs.14,000. For the purpose
of dissolution, building has been revalued at Rs.24,800. No interest on capital was
charged and partners did not draw any salary.
Show the computation of value of Goodwill and prepare Y’s Loan Account. Assume
that normal management remuneration is Rs.6,000 p.a. and normal return on capital is
12%.
46. Brick, Sand and Cement were partners in a firm sharing profits and losses in the ratio
of 3:2:1 respectively. Following is their balance sheet as on 31.12.2004:
Liabilities Rs. Assets Rs.
Brick Capital Account 30,000 Land and Building 50,000
Sand Capital Account 20,000 Furniture 15,000
Cement Capital Account 10,000 Stock 20,000
Reserve 29,800 Debtors 12,500
Creditors 10,200 Cash and Bank 2,500
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Lime is to be admitted as a partner with effect from 1st January 2005, on the following
terms:
(i) Lime will bring Rs.15,000 as capital and Rs.12,000 as premium for
goodwill. Half of the goodwill will be withdrawn by the partners.
(ii) Lime will be entitled to 1/6th share in the profits of the firm.
(iii) The assets will be revalued as: Land and Buildings Rs.56,000, Furniture
Rs.12,000, Stock Rs.16,000, Debtors Rs.7,000.
(iv)The claim for a creditor for Rs.2,300 is paid at Rs.2,000.
(v) Half of the Reserve is to be withdrawn by the partners.
Prepare the Opening Balance Sheet of the New Firm.
47. Asha Limited had issued Rs.2,00,000, 10% debentures on which interest was payable
half-yearly on 30th September and 31st March.
Show the necessary journal entries relating to debenture interest for the year ended
31st March, 2007 assuming that all moneys were duly paid by the company. Tax
deducted at source is 10%.
48. Vardan Limited issued 10% Debentures of Rs.6,00,000 with a condition that they
should be redeemed after 3 years at 10% premium. The amount set aside for the
redemption of debenture is invested in 5% Government Securities. The sinking fund
table shows that 0.31720855 at 5% compound interest in three years will become
Re.1.
You are required to give Journal entries for recording the transactions.
49. Meenakshi Limited issued on 1st April 2004 1,000, 12% Debentures of Rs.100 each
repayable at the end of 3 years at a premium of 5%. It was decided to create a sinking
fund for the redemption of debentures. The investments are expected to earn interest
at 5% p.a.
Reference to the sinking fund table shows that Rs.0.317209 invested at 5% p.a.
amounts to Re.1 at the end of three years. At the end of three years, the investments
were sold at Rs.70,000 and the debentures were redeemed.
Prepare Debentures Account, Sinking Fund Account and Sinking Fund Investment
Account.
50. Sri Vaihbava Publications Ltd. Invited applications for 10,000 shares of Rs.10 each
the details are give as follows:
On Application Rs.2, On Allotment Rs.3, On First and Final Call Rs.5. The public
applied for 10,000 shares and they were allotted.
Show the vouchers of the above transaction.
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